The “mania” of real estate predicting and forecasting is beginning to pick up as the summer selling season comes to an end, with hints of promise starting to appear in the housing market. After a grueling Housing Bust that left the economy severely damaged, property data analysis statistics collected from public records now show signs of recovery.

Both the Bears and Bulls have been fighting it out, relying on the training method of the S&P/Case-Shiller Home Price Index. The Bulls are starting to swing away, indicating a sign to the return of the boom days of old. The Bears are ducking the punches citing the lagging, inadequate property data analysis in the Case-Shiller Index as a sign of caution.

The stage for the Housing Market Bottom Showdown is set, with the American public’s perception of the market at stake. Leaning too far to one side could mean a repeat of the 2006 Bust. Are we to believe that we are on the verge of a turnaround, or do we still need to be patient? We will take a look at the supporting arguments from both corners, which are based on the Case-Shiller Index and determine the best judgment for the public moving into the winter months. Here’s the tale of the tape.

Packed with quotes of “positive signs” “great news” and “booming” about the Index, the optimism is rampant. It goes on to say that an area in Los Angeles had “booming” home sales again. Looking at the 20-city index below, L.A. had 0% change from Q1.

Is that really a boom? The American public needs real facts, not fluff. The following table is extracted from CNN.money.com:

Source:S&P/Case-Shiller Home Price Index

Year-over-year, EVERY city is still negative, with 15 cities negative over 10%. The talk of “shadow inventory” further depreciating the market crept in as well.

It has been noted before that Case-Shiller Index probably over weights foreclosure sales (Reported by AccuriZ and NewsnEconomics). Foreclosure-metro areas have been more heavily weighted, dragging down the overall value of the Index. Does it seem logical that financial institutions would dump houses on the market, knowing that such actions would further deflate property values? There are duplicate and triplicate recordings of foreclosures out there; thus distorting the actual count of properties in foreclosure.

Asking the important question: Would you sell in a down market? It seems to have more common sense than the confusing and contradictory analysis of the sales data presented by Case-Shiller. Letting the market stabilize will enable mortgage servicing companies to come to terms with existing owners. The AccuriZ Mortgage Assistance Program also provides a solution to this problem.

The article ends with this quote from Mr. Shiller, “I have found that momentum matters,” he said, “and this is a sudden break in [downward] momentum. The [market] psychology seems to be changing.”

Improved by how much? 10 of the 20 markets listed are bordering the 1% line. Considering the margin for error, 1% is a meaningless number.

The article then proceeds to list 3 reasons why the Case-Shiller Index is imperfect:

It’s limited to 20 U.S. cities, representing just 9% of the U.S. population

It’s on a 2-month lag, reflective of how housing was, not how it is

It ignores locality, grouping city neighborhoods into one big lump

So if it’s “time to call a housing bottom,” what other data is being used (besides the imperfect Index) to make this claim?

Admitting that the Case-Shiller Index is imperfect is one thing, but using that same imperfect data (with no other visible sources) to create a market forecast is completely another.

Many reports have economists using the skewed data of the Index to captivate headlines and bolster their own personal agendas. When not weighed against other sources of information, the Index is questionable in determining a forecast.

Real facts about property data are needed to determine the current state of the market. This article ends by pressing people to buy now with contact information for a pre-approval letter.

Later, Mr. Shiller expresses “great reluctance” in forecasting market prices. But this is exactly what transpires as economists make predictions solely based on the Case-Shiller report.

For example, later in the article housing economist Thomas Lawler notes that “the price index should keep gaining in the coming months” in the next paragraph. Based on what? What are we supposed to believe? The reason why it’s ‘hard to tell’ is because everyone has a different interpretation without providing the facts.

It ends with this quote from Lawler, “Indeed, the [index] is almost certain to continue increase over the next few months. After that, who knows?” said Mr. Lawler.

Advantage: BEARS: Too confusing to pinpoint.

Housing Market: Looking Better, But Still Troubled from Time.com: Using more than just the Case-Shiller Index, this article notes looking “behind the headline” to see that the “sector is still fragile.” It looks deeper into the property data to see that the low- and mid-tier homes are doing better than more-expensive homes. Once again we see that Square Footage Matters! (Reported by AccuriZ). In a recent Manhattan Condo report we predicted stabilization by Q4, based on square footage;

Source: AccurZ.com

Also, noting that data on new-home sales like the Index are “notoriously imprecise and volatile,” the article states that “new home-sales are best looked at over five or six months.” So what is the real benefit of these Indexes?

The Time.com report even stated that the margin of error on one particular Index was plus or minus 13.4%. With that said who really benefits from this information?

The article ends with, “We’re now moving forward, and even though it looks like we’re doing that in a positive way, there could still be more plot twists ahead.”

Advantage: BEARS

So how do they match up for the American public? When the match is based on one specific source of data that has been historically ineffective, no one wins. The Bulls emotions are high right now, but as the emotional sector dies down – and foreclosures, unemployment and a housing oversupply (in the AccuriZ Housing In Crisis report) start to do damage in the later rounds – the Bears’ perspective might take control.

Time and Patience are the elements that work to everyone’s benefit. While things are looking better, we still have some time to heal. Incomplete data analyses that rely on public records and outdated property data from certain regions of the country have little impact other than stirring up the emotional sector of the market. A level of confidence needs to be balanced with a level of cautiousness, as quarterly reports and month-to-month gains are not enough to be deciding factors in a market forecast.

The latest news on property data and Home Prices should not come as a surprise and we should not begin celebrating an end to the crisis. In our article Cyclical, Seasonal and Emotional, we discussed the three critical phases of real estate selling patterns that have attributed to the housing bust.

The latest news and public records indicate that these critical phases are performing to historical levels. That is, the summer seasonal market is showing a correction to the cyclical change that began in 2007. Now the million dollar question is, will the fall seasonal market (which affects Florida, Arizona and Nevada) continue to show recovery or will the markets pause until the next “Selling Season in 2010?”

Our report: Housing in Crisis(published in March 2009) addressed the broader issue of excess housing. Again, there is good news on this front. The excess housing is being absorbed at an annualized rate of about 1 million units. Having a glut of 5 million units at the end of 2008, this means we have another three to four years before the overall markets start to recover.

Housing Recovery is the focal point here. We predict that the Northeast will continue to show stability, with modest corrections in local markets from 3% to 5% through the end of 2010. The Midwest remains strong and will experience similar stability. In the five biggest areas where excess housing still dictates selling patterns, we are predicting that Arizona will recover sooner than sections of Florida and Vegas.

The latest news on the housing market is not a surpirse. Recovery and Stability are the focal points and we should start to see signs of this in the upcoming months.

No one should be surprised when the next Housing Index comes out in September which will show a further strengthening of the market and continued adjustment in housing values in an upward trend. Our report Median Sales Price published in March of 2009 indicated that the overall Median Sales Price would move upward to $215,000 to $220,000 by year end. The current median sale price as reported by the Commerce Department is a $210,000, an increase of over 5% from the low of $201,400 early this year.

As we all sit inside our air conditioned offices wondering what will be the next “big” news regarding real estate, the Commerce Department released its estimate of New Single Family Home Construction today.

Stop! We can be happy with this news or we can take it in stride. Every article that I have read, the author comes from a point of strength in that there is some unique data set that only they have access to. There never appears to be any common sense applied and invariably there are always quotes from interested “economic advisors”. The latest news is a classic example.

581,000 new single family homes were built in 2009, according to public records. Now that is a dismal number compared to the hay day of 2005/2006 when over 2 million homes were being built (See Housing In Crisis Report). But is this really a bad number? Based on property data records, every year in the United States each market replaces existing inventory with new inventory because older homes need to be rebuilt and because of natural disasters. There also is the market for individual, non development homes that are built to meet unique demands of property owners. So 581,000 is a good number.

But let’s not forget that over 3.5 million vacant housing units that were newly built remain in the market. Let’s not forget that Supply and Demand need to be in balance for a healthy real estate economy to exist. And let’s not forget that supply is reduced by people buying homes and presently this is occurring through natural population growth. So with the national population growing at about 4 million people annually, we will only see about 1 million of the excess inventory absorbed annually. This means three more years before true market levels begin to appear.

Of course in areas where overdevelopment was held in check, the housing markets are already in full recovery. But for areas in Florida, Nevada and Arizona, recovery may be five years away.

Let us know what you think, what you are experiencing in your communities and what you think about the housing recovery!

WASHINGTON (AP) — New U.S. home sales rose by the largest amount in more than eight years last month, in another sign the housing market is finally bouncing back from the worst downturn in decades.

Great news or just a seasonal factor coming to play? Public recors show that residential sales activity is returning to the levels of the seasonal sales market. No one should be surprised that new homes sales have increased with the incentives of the $8,000 new home buyer program and interest rates below 5.5%.

But hold on, seasonal sales activity should be up. The peak months for sales will be June, July and August. So for the next several months we should continue to see a recovery in activity. The key benchmark for recovery is the median sales price in the property data, which is still down. Once the excess building supply and foreclosure activity (Housing In Crisis , Mortgage Assistance Program) abates, this number should correct itself to higher levels of $220,000 to $225,000. This will not occur until the summer selling season of 2010.